The CRTC, whether for political reasons (they were told by the government that UBB was unacceptable after all) or for technical reasons (we can only hope as it would mark a shift to a more reasonable approach by the CRTC), finally came to the right decision.
The decision basically says that network providers like Bell can charge a fixed rate for each last mile connection, a fixed rate per 100Mbps of connection the independent ISP wants to their network as well a some ancillary monthly charges. There is also an option to combine this all in to a single flat rate per connection, but the important carriers all have gone with the first option.
This squares perfectly with traditional network rates, where you buy a link and it doesn’t matter how much you use it, you pay for the capacity.
One item I noticed is there is quite a bit of justification around the cost model in the decision. It’s based upon actual costs plus a “reasonable” markup, though what that is is never revealed in the decision, but we can say that it’s somewhere between 15 and 25 percent.
The really juicy part of the decision is in the appendices where the CRTC lays out the costs:
|Monthly access rate (without usage)|
|Speed||Bell||Cogeco||MTS Allstream||RCP (Rogers)||Videotron|
|Capacity per 100g||$2,213||$2,695||$281||$1,251||$1,890|
There are several interesting things to note here:
- Videotron has some weird speeds (see * above), for simplicity I matched them as close to the competition as possible.
- Bell basically admits that the cost difference between speeds is down to which technology you have, ADSL cost $14/month and ADSL2 costs $25/month.
- The cable providers all pretty much agree there’s a sliding scale of increased costs as rates increase.
- Bell and Cogeco seem to be significantly more costly than their competition.
- There’s a clear disconnect between the providers and their capacity costs, it’s not logical MTS Allstream can provide the same service at 10% the cost of Cogeco.
So what should we Take from this? Looks like everyone should move to where MTS Allstream is available, their going to have significantly lower costs in comparison to everyone else. But in reality someone needs to look at WHY there’s such a big difference in costs. Without any real competition, the providers can simply continue to do incredibly wasteful implementations because they know they will always be able to make a “reasonable” profit on them.
Getting a competitive environment in place would drive all the costs lower as each provider tried to undercut each other.
The question will now become what does the above pricing mean for the average user. At first glance it looks like an increase will likely be coming once this is implemented on Feb. 1, 2012.